BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    SB 1300


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          Date of Hearing:  June 28, 2016


                            ASSEMBLY COMMITTEE ON HEALTH


                                   Jim Wood, Chair


          SB  
          1300 (Hernandez) - As Amended May 31, 2016


          SENATE VOTE:  36-1


          SUBJECT:  Medi-Cal:  emergency medical transport providers:   
          quality assurance fee.


          SUMMARY:  Establishes the Medi-Cal Emergency Medical  
          Transportation Reimbursement Act which assesses an annual  
          quality assurance fee (QAF) on providers of emergency medical  
          transportation (EMT) in accordance with a prescribed methodology  
          beginning on July 1, 2017. and continuing each state fiscal  
          quarter.  Applies the QAF to three EMT billing codes.   
          Specifically, this bill:  


          1)Excludes from the definition of EMTs air ambulance providers,  
            or transportation provided by taxicabs, litter vans,  
            wheelchair vans, or other forms of public or private  
            conveyances, as specified.  


          2)Requires each EMT provider, on or before August 15, 2016, to  
            report to the Department of Health Care Services (DHCS) data  
            on the number of actual EMTs by payor type, including, without  
            limitation, Medi-Cal fee-for-service (FFS) EMTs and Medi-Cal  








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            managed care (MCMC) EMTs, and gross receipts from the  
            provision of EMTs provided each quarter from July 1, 2015, to  
            June 30, 2016, in a manner prescribed by DHCS.


          3)Requires each EMT provider, commencing with the fiscal quarter  
            beginning on October 1, 2016, and each fiscal quarter  
            thereafter, on or before the 45th day of the quarter, to  
            report to DHCS data on the number of actual EMTs by payor  
            type, as specified, and gross receipts from the provision of  
            EMTs provided in the quarter preceding the quarter in which  
            the report is due, in an manner and format prescribed by DHCS.


          4)Authorizes DHCS to establish an Internet Website for the  
            submission of the required reports specified in 2) and 3)  
            above.


          5)Permits DHCS to require certification by each EMT under  
            penalty of perjury of the truth of the reports required in 2)  
            and 3) above.  Authorizes DHCS, upon written notice to an EMT  
            provider, to impose a penalty of $100 per day that an EMT  
            provider fails to make a report, as specified.  Provides that  
            failure to make the report within 90 days of the date upon  
            which the report was due is considered a licensure violation,  
            as specified.


          6)Requires, on or before June 15, 2017, and each June 15  
            thereafter, the DHCS Director to calculate the annual QAF rate  
            applicable to the following state fiscal year based on the  
            most recently collected data collected from EMT providers (See  
            2) and 3) above), and publish the annual QAF rate on its  
            Internet Website.  


          7)Prohibits the fees calculated and collected from exceeding the  
            amounts allowed under federal law.  Specifies calculations of  








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            the QAF rate as follows: 


             a)   Calculate the QAF rate for state fiscal year (FY)  
               2017-18 by multiplying the projected total annual gross  
               receipts for all EMT providers subject to the fee by 5.5%,  
               the resulting product to be divided by the projected total  
               annual EMTs by all EMT providers subject to the fee for the  
               state FY; and,


             b)   For state FY 2018-19 and thereafter, the QAF shall be  
               calculated by a ratio, the numerator of which shall be the  
               sum of the product of the projected aggregate fee schedule  
               amount and the effective state medical assistance  
               percentage, and the amount of DHCS staffing and  
               administrative costs not to exceed $350,000, and the  
               denominator of which shall be 95% of the projected total  
               annual EMTs by all EMT providers subject to the fee for the  
               state FY.


          8)Requires the DHCS Director, on or before June 15, 2017, and  
            each June 15 thereafter, to publish the annual QAF rate on its  
            Internet Website.


          9)Requires the Director of DHCS to adjust the QAF rate, as  
            specified.


          10)Requires each EMT provider subject to the fee to remit to  
            DHCS an amount equal to the annual QAF rate on specified  
            timeframes.  Authorizes DHCS to assess interest not paid on  
            the due dates at the greater of 10% per annum or the rate at  
            which DHCS assesses interest on Medi-Cal program overpayments  
            to hospitals that are not repaid when due.










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          11)Authorizes DHCS, if any fee is more than 60 days overdue to  
            deduct any unpaid fee and interest owed from any Medi-Cal  
            reimbursement payments owed to the provider until the full  
            amount of the fee and interest are recovered.  Requires DHCS  
            to give the provider written notification of the deduction  
            which could be deducted over a period of time taking into  
            account the financial condition of the provider.  Assesses an  
            additional penalty if a payment is not received after 60 days.


          12)Establishes the Medi-Cal Emergency Transport Fund for  
            purposes of the QAF raised in this bill and provides funding  
            for health care coverage, in the following order of priority:


             a)   To pay for the DHCS's staffing and administrative costs  
               for implementation of this bill, not to exceed $350,000 for  
               each FY, exclusive of any matching funds; 


             b)   To pay for the health care coverage in each FY in the  
               amount of 10% of the projected quality assurance fee  
               revenue for that FY, as calculated by DHCS on or before  
               June 15 preceding that FY, exclusive of any federal  
               matching funds; and,


             c)   To make increased payments to EMT providers.


          13)Increases, effective July 1, 2017, the Medi-Cal FFS payment  
            schedule governing reimbursement to EMT providers for EMTs.


          14)Requires DHCS to calculate the projections based on data  
            submitted pursuant to 2) and 3) above.  Specifies the payment  
            schedule amounts.










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          15)Requires the FFS and MCMC payment schedule increase to be  
            funded solely from the QAF, and federal reimbursement and any  
            other related federal funds.


          16)Establishes provisions for delayed payment of the QAF if  
            there is a delay in the implementation of this bill for any  
            reason, including a delay in any required approval of the QAF  
            and the reimbursement methodology.  Includes in these  
            provisions retroactive fees and the authority for DHCS to make  
            retroactive payment of supplemental rates.  


          17)Authorizes the DHCS Director to adopt regulation as are  
            necessary to implement this bill.  Authorizes adoption of  
            regulations as emergency regulations, as specified. 


          18)Requires DHCS to request approval from the federal Centers  
            for Medicare and Medicaid Services (CMS) for the use of fees  
            collected for the purpose of receiving federal matching funds.


          19)Authorizes the DHCS Director to alter the methodology to the  
            extent necessary to meet the requirements of federal law or to  
            obtain federal approval.  Requires the DHCS Director to  
            execute a declaration if an alteration is necessary.  


          20)Authorizes the DHCS Director to add categories of exempt EMT  
            providers or apply a nonuniform fee per transport to EMT  
            providers that are subject to the fee in order to meet  
            requirements of federal law or regulations.


          21)Implements this bill only under the following conditions:


             a)   The state receives federal approval of the QAF from CMS;  








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               and,


             b)   The state receives federal approval for the increased  
               FFS payment schedule increases.


          22)Ceases implementation of this bill if one of the following  
            conditions is satisfied:


             a)   CMS no longer allows the use of the provider assessment;


             b)   The Medi-Cal FFS payment schedule increase no longer  
               remains in effect;


             c)   The QAF assessed and collected is no longer available;  
               or,


             d)   A final judicial determination by the California Supreme  
               Court or any California Court of Appeal that the revenues  
               collected pursuant to this article that are deposited in  
               the Fund are considered subject to be proceeds of taxes  
               within the meaning of Proposition 98.


          23)Makes this bill inoperative in the event of a final judicial  
            determination made by any state or federal court that is not  
            appealed, or by a court of appellate jurisdiction that is not  
            further appealed, in any action by any party, or a final  
            determination by the administrator of the CMS, that federal  
            financial participation (FFP) is not available with respect to  
            any payment made under the methodology implemented under this  
            bill because the methodology is invalid, unlawful, or contrary  
            to any provision of federal law or regulations or of state  
            law.








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          EXISTING LAW:  


          1)Establishes the Medi-Cal program, administered by the DHCS  
            which provides health benefits to low-income individuals who  
            meet specific eligibility criteria.



          2)Includes EMT and nonemergency medical transport (NEMT) in the  
            Medi-Cal schedule of benefits.



          3)Reduces specified Medi-Cal provider rates, including ground  
            ambulance services effective June 1, 2011, by 10% for dates of  
            service on and after June 1, 2011, subject to specific  
            requirements.  Applies the 10% reduction for ambulance  
            providers for dates of service on or after September 5, 2013,  
            but was not applied retroactively back to June 2011.



          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee:


          1)Ongoing administrative costs, likely in the hundreds of  
            thousands to low millions per year for DHCS to develop  
            regulations, gain federal approval, make any necessary system  
            changes, oversee collection of the quality assurance fee, and  
            make supplemental payments (special fund, General Fund (GF),  
            and federal funds). This bill provides that $350,000 per year  
            shall be available to DHCS for administrative costs (the state  
            would be able to draw down additional federal funding to help  
            cover the administrative costs). To the extent that actual  
            administrative costs are higher, those costs would be paid  
            from the GF and federal funds.








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          2)Ongoing GF benefit of about $3 million per year. This bill  
            provides that 10% of revenue collected (after setting aside  
            administrative funding) shall be available to the state for  
            support of the Medi-Cal program. In doing so, this bill  
            reduces the need for GF support of the Medi-Cal program by an  
            equal amount.


          3)Additional payments of about $77 million per year for EMT in  
            the Medi-Cal program (special fund and federal funds). The  
            quality assurance fee is projected to generate about $30  
            million per year in revenues (after accounting for  
            administration and state benefits). With federal matching  
            funds, there would be about $77 million per year for increased  
            reimbursements to providers.


          COMMENTS:


           1) PURPOSE OF THIS BILL.  According to the author, this bill  
             increases Medi-Cal EMT rates by levying a QAF on three EMT  
             reimbursement codes. The resulting revenue would then be used  
             to draw down additional federal Medicaid funds to increase  
             Medi-Cal emergency transportation rates, without imposing a  
             cost to the state GF. In addition, 10% of revenue raised by  
             the QAF would go to the state GF.  The author argues  
             inadequate Medi-Cal reimbursement for ambulance transport is  
             a long-standing issue and places a strain on the state's  
             emergency medical services (EMS) system.  Unlike other  
             Medi-Cal providers, ambulance providers cannot "opt out" or  
             otherwise limit their participation in the Medi-Cal program  
             the way other nonemergency health care providers can to  
             obtain a more favorable payor mix. 

           While the costs to provide essential ambulance services has  
             significantly increased during the past decade, including  








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             escalating wages and benefits, and increasing insurance  
             premiums, Medi-Cal reimbursement has not kept pace with these  
             increased costs and has in fact declined to less than the  
             amounts paid in 1999.  The QAF proposed by this bill would  
             increase Medi-Cal EMT rates by drawing down federal Medicaid  
             dollars, which will flow back to the state to be used by  
             ambulance providers to maintain the high level of care that  
             is expected of the state's EMS and 911 programs.  
          2)BACKGROUND.  
          
             a)   Provider Taxes.  Federal Medicaid law authorizes states  
               to impose health care-related provider taxes on certain  
               types of health care services (such as inpatient hospital  
               services, nursing facility services, emergency ambulance  
               services and managed care organization) without affecting  
               federal matching funding.  Health care-related taxes are  
               defined as a licensing fees, assessments, or other  
               mandatory payments that are related to the provision of, or  
               payment for, health care services or items.  In many  
               states, including California, states collect these payments  
               from health care providers to help finance the nonfederal  
               share of their Medicaid expenditures.  To be deemed  
               permissible under federal law, health-care related taxes  
               must be:
             
               i)     Broad based:  imposed on all providers within a  
                 specified class of providers;
               ii)    Uniform:  applied at the same rate for all payers of  
                 the tax; and,
               iii)   No hold harmless:  the state may not provide a  
                 direct or indirect guarantee that providers receive their  
                 tax payment back, or be "held harmless" from the tax.
               
               Federal rules permit some health care-related taxes that do  
               not meet the definition of being "broad-based" and  
               "uniform."  To obtain permission for such a tax, states  
               must formally request a waiver of the broad-based and  
               uniform requirements from CMS, and within the waiver  
               request, demonstrate that the tax structure is generally  








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               redistributive.  However, federal law does not allow for  
               any waiver of the no-hold-harmless requirement.

               California currently has provider fees on managed care  
               plans, hospitals, skilled nursing facilities and  
               intermediate care facilities for the developmentally  
               disabled.

             b)   Medi-Cal rates for ambulance services.  Medi-Cal covers  
               both EMT and NEMT.  EMT is provided when necessary to  
               obtain program covered benefits when the beneficiary's  
               medical/physical condition is acute and severe,  
               necessitating immediate medical diagnosis and treatment in  
               order to prevent death or disability.  Such transportation  
               does not require prior authorization and is always by  
               ambulance. 

             When billing Medi-Cal for a "911 call," ambulance providers  
               bill a Basic Life Support (BLS) base rate of $106.38.  In  
               addition to the base rate, Medi-Cal provides additional  
               funding for additional costs and services, such as mileage,  
               night calls, extra attendants, waiting times, and certain  
               supplies and services.  Medi-Cal FFS emergency base  
               ambulance rates were increased in 1997 and 1998 and were  
               last increased in 1999 by 11.7%, to $118.20.  Medi-Cal base  
               ambulance rates were reduced in 2008 and again in 2013 (by  
               10%).  The current Medi-Cal base rate is $106.38, a rate  
               that is $11.82 lower than the rate in 1999.
             
             c)   EMT.  This bill imposes a QAF on revenue EMT providers  
               receive from three EMT reimbursement codes, as follows:
             
               i)     A0429 BLS Emergency.  BLS vehicles must be staffed  
                 by at least two people, at least one of whom must be  
                 certified as an emergency medical technician by the State  
                 or local authority where the services are being furnished  
                 and be legally authorized to operate all lifesaving and  
                 life-sustaining equipment on board the vehicle.  An  
                 emergency response is one that, at the time the ambulance  








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                 supplier is called, responds immediately or responds as  
                 quickly as possible to take the steps necessary to  
                 respond to the call.
               
               ii)    A0427 Advanced Life Support (ALS1) Emergency.  ALS1  
                 vehicles must be staffed by at least two people, at least  
                 one of whom must be certified by the State or local  
                 authority as an EMT-Intermediate or an EMT-Paramedic.

               iii)   A0433 ALS 2 - ALS2 is the transportation by ground  
                 ambulance vehicle and the provision of medically  
                 necessary supplies and services including: 1) at least  
                 three separate administrations of one or more medications  
                 by intravenous push/bolus or by continuous infusion  
                 (excluding crystalloid fluids) or 2) ground ambulance  
                 transportation and the provision of at least one of the  
                 ALS2 procedures: Manual defibrillation/cardioversion;  
                 Endotracheal intubation; Central venous line; Cardiac  
                 pacing; Chest decompression; Surgical airway; or  
                 Intraosseous line. 

             d)   QAF rate.  This bill assesses a QAF on revenue EMT  
               providers receive from three EMT reimbursement codes as  
               specified above.  A QAF rate of 5.5% is assessed for  
               2017-18 against the gross revenue of all EMT providers from  
               the three reimbursement codes.  After 2017-18, estimates of  
               the QAF rate provided by the 911 Ambulance Provider's  
               Medi-Cal Alliance, the sponsor of this bill, are as  
               follows:  for 2018-19 the QAF would be at 5.7%; for 2019-20  
               it would be 5.8%; and for 2020-21 and beyond, the rate  
               would be at 5.9%.  The increase in the QAF rate is needed  
               to account for the reduction in the federal match (known as  
               the Federal Medical Assistance Percentages or FMAP) for  
               certain populations including adults who became eligible  
               for Medi-Cal under the optional expansion enacted under the  
               federal Affordable Care Act.    

          3)SUPPORT.  The 911 Ambulance Provider's Medi-Cal Alliance, the  
            sponsor of this bill, and the Emergency Medical Services  








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            Administrators Association of California, state that this bill  
            provides financial relief to public and private ambulance  
            providers who have been impacted by 18 years of a growing  
            divide between the cost of providing emergency ambulance  
            services and the cost of providing care to patients.  
          
          4)RELATED LEGISLATION.  AB 1257 (Gray) would have required DHCS  
            to establish payment rates for ground ambulance services based  
            on changes in the Consumer Price Index-Urban and the  
            California weighted average Geographic Practice Cost Index,  
            and would have designated the ambulance cost study conducted  
            by the federal Government Accountability Office as the  
            evidentiary base.  AB 1257 was held on the Assembly  
            Appropriations Committee suspense file.

          5)PREVIOUS LEGISLATION.  

             a)   AB 2577 (Cooley and Pan) of 2014 would have authorized  
               governmental entities to make intergovernmental transfers  
               as the non-federal share of expenditures for ground EMT  
               services for purposes of drawing down federal Medicaid  
               matching funds. AB 2577 was vetoed by the Governor.

             b)   SB 1374 (Hernandez) of 2013 would have required DHCS, by  
               July 1, 2015, to adopt regulations establishing the  
               Medi-Cal reimbursement rate for ground ambulance services  
               using one of two specified methodologies.  SB 1374 was held  
               on the Senate Appropriations Committee suspense file.

             c)   SB 359 (Hernandez) of 2011, was similar to SB 1374 in  
               that it would have required DHCS, by July 1, 2012, to adopt  
               regulations establishing the Medi-Cal reimbursement rate  
               for ground ambulance services using one of two specified  
               methodologies.  SB 359 was held on the Senate  
               Appropriations Committee suspense file and was gutted and  
               amended and used for another purpose.

             d)   AB 678 (Pan), Chapter 397, Statutes of 2011, establishes  
               a supplemental payment program for governmental entity  








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               providers of Medi-Cal EMT services, based on certified  
               public expenditures using state or local governmental  
               entities' funds as the required federal match.  

             e)   AB 2173 (Beall), Chapter 547, Statutes of 2010,  
               establishes a $4 penalty on every vehicle code violation.  
               The resulting revenue would be matched by federal funds and  
               used to make supplemental payments for emergency air  
               medical transportation services in the Medi-Cal program.

             f)   AB 1932 (Hernandez) of 2010, in its final form, would  
               have authorized DHCS to utilize certain service levels for  
               purposes of determining billing codes for emergency and  
               nonemergency basic life and advanced life support  
               transportation and specialty care transportation.  If DHCS  
                       used the service levels to determine billing codes, AB 1932  
               would have required DHCS to adopt the definitions and  
               Healthcare Common Procedure Coding System codes for those  
               service levels that have been established by CMS, and to  
               determine the above described billing codes in a  
               revenue-neutral manner.  AB 1932 was held on the Senate  
               Appropriations suspense file.

             g)   AB 1174 (Hernández) of 2009 would have required Medi-Cal  
               to cover emergency BLS and advanced life support services  
               when a patient reasonably believes that without immediate  
               medical attention, a serious health condition, as  
               specified, could reasonably result.  In addition, AB 1174  
               would have increased and established in statute maximum  
               Medi-Cal reimbursement rates for ambulance transportation  
               services, and would have required the rates be adjusted to  
               reflect changes in the California Consumer Price Index.  AB  
               2257 (Hernandez) of 2008 was similar to AB 1174, except  
               that AB 2257 would have also increased Medi-Cal rates for  
               air ambulance providers. AB 1174 and AB 2257 were both held  
               on the Assembly Appropriations suspense file.

             h)   AB 511 (De La Torre) of 2010 would have imposed, as a  
               condition of participation in the Medi-Cal Program, a QAF  








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               on certain ambulance transportation services providers, to  
               be administered by DHCS.  The proceeds from the QAF would  
               be required to be deposited into the Medi-Cal Ambulance  
               Transportation Services Providers Fund (Fund).  Moneys in  
               the Fund would be available only to enhance FFP for  
               ambulance transportation services under the Medi-Cal  
               program, or to provide additional reimbursement to, and to  
               support quality improvement efforts of, ambulance  
               transportation services providers, including increased  
               reimbursement for and improvement of the quality of the  
               provision of advanced life support services, as defined.   
               AB 511 died in the Senate.

             i)   AB 1153 (Beall) of 2009 would have levied an additional  
               penalty of $3 upon every fine, penalty, or forfeiture  
               imposed and collected by the courts for all offenses  
               involving a vehicle violation, except certain parking  
               offenses, in each county.  The resulting revenue would be  
               transferred to the state and continuously appropriated to  
               DHCS solely for the purposes of augmenting Medi-Cal  
               reimbursement paid to emergency air medical transportation  
               services providers.  DHCS would be required to use the  
               moneys in the Emergency Air Medical Transportation Act Fund  
               and federal matching funds to increase the Medi-Cal  
               reimbursement or supplemental payments for emergency air  
               medical transportation services in an amount not to exceed  
               normal and customary charges charged by the emergency air  
               ambulance transportation services provider.  AB 1153 was  
               held on the Senate Appropriations suspense file.

          6)AMENDMENTS.  This bill requires EMT providers to report to  
            DHCS on or before August 15, 2016, data on their transports to  
            be used to calculate the QAF.  To give DHCS sufficient time to  
            determine the manner and format of reporting the data, this  
            timeline needs to be adjusted.  Additionally, the author is  
            proposing to delete penalty provisions for failure to submit  
            the report.  

               14129.1.








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                (a) On or before  August 15, 2016   November 15, 2016  , each  
               EMT provider shall report to the department data on the  
               number of actual EMTs by payor type, including, without  
               limitation, Medi-Cal fee-for-service EMTs and Medi-Cal  
               managed care EMTs, and gross receipts from the provision of  
               EMTs provided in each quarter from July 1, 2015, through to  
                June 30, 2016   October 31, 2016  , inclusive, in a manner and  
               format prescribed by the department.
               (b) Commencing with the fiscal quarter beginning on  October  
               1, 2016   January 1, 2017  , and each fiscal quarter  
               thereafter, on or before the 45th day of the quarter, each  
               EMT provider shall report to the department data on the  
               number of actual EMTs by payor type, including, without  
               limitation, Medi-Cal fee-for-service EMTs and Medi-Cal  
               managed care EMTs, and gross receipts from the provision of  
               EMTs provided in the quarter preceding the quarter in which  
               the report is due, in a manner and format prescribed by the  
               department.
               (c) The department may establish an Internet Web site for  
               the submission of reports required by this section.
               (d) The department may require a certification by each EMT  
               under penalty of perjury of the truth of the reports  
               required under this section. Upon written notice to an EMT  
               provider, the department may impose a penalty of one  
               hundred dollars ($100) per day against an EMT provider for  
               every day that an EMT provider fails to make a report  
               required by this section within five days of the date upon  
               which the report was due.  If an EMT provider has not made a  
               report as required by this section within 90 days of the  
               date upon which the report was due, the failure to make the  
               report shall be considered a violation of a section of the  
               Vehicle Code that relates to the EMT provider's licensed  
               activities for the purposes of Section 2542 of the Vehicle  
               Code.
           
          REGISTERED SUPPORT / OPPOSITION:











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          Support


          911 Ambulance Provider's Medi-Cal Alliance (sponsor)


          Alameda County Board of Supervisors


          American Ambulance


          California Fire Chiefs Association


          California Professional Firefighters


          Emergency Medical Services Administrators Association of  
          California


          Fire Districts Association of California


          Gold Coast Ambulance


          McCormick Ambulance


          Mercy Medical Transportation


          Napa County Board of Supervisors


          Paramedics Plus








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          Opposition


          None on file.




          Analysis Prepared by:Rosielyn Pulmano / HEALTH / (916)  
          319-2097